The mechanism and progress of oxidation of the pearlite phase of 1018 carbon steel in contact with a borate medium was monitored and characterized using the in situ electrochemical scanning tunneling microscopy (ECSTM) technique. The pearlite phase was identified by characteristic microstructure using a previous experimental methodology. The progress of the pearlite oxidation due to differently imposed anodic potential was monitored via change of the electrode surface morphology. ECSTM images indicate two types of the iron oxide formation on the pearlite surface, with different and distinguished morphology. Regarding previously reported data about the oxide formation, these two types of iron oxides were associated to magnetite (internal oxide) and maghemite (external oxide). The needle-like features, as a genuine characteristic of the pearlite phase, are visible at the internal oxide layer and even at the maghemite layer. The cross-sectional analysis of the obtained images clearly shows detailed mechanism and morphology characteristics of the oxide layer development in both cases. Based on these observations, a detailed model of the pearlite surface modification during the oxidation was proposed. The model describes pearlite oxidation involving internally and externally formed iron oxides via several consecutive stages. (c) 2005 The Electrochemical Society.